The Biggest Advantage We Retail Investors Have!!!

Value Investing with Sven Carlin, Ph.D.•May 31, 2026

Summary

Sven emphasizes that doing nothing is a valid and often superior strategy when the market doesn't offer favorable risk-reward profiles. He compares the flexibility of retail investors to institutional managers who are incentivized to be fully invested at all times, noting that retail investors can afford to wait for 'cheap' opportunities. Sven's market outlook is cautious, highlighting that the S&P 500's dividend yield of 1.3% is significantly lower than its historical 4% average. He notes that with 10-year treasuries yielding 4%, the probability of bonds outperforming the stock market over the next decade is high. He personally seeks out disregarded, non-AI stocks with a 10% earnings yield and 5% growth to achieve a 15% annual return.

S&P 500: Sven highlights that the index is at all-time highs with a very low dividend yield of 1.3%. He warns that the risk-reward ratio is unfavorable compared to historical norms and suggests that investors might be better off waiting for better opportunities. He notes that if the index stays flat for 10 years, it will likely be outperformed by treasuries.

Berkshire Hathaway: Sven points out that Warren Buffett is currently holding a record $380 billion in cash, which is about 35-40% of the company's balance sheet. He uses this as a primary example of how sophisticated investors choose to do nothing when no bargains are available. He emphasizes that Buffett only buys when he is 'smart around spots' and stays within his circle of competence.

Treasury Bonds: Sven discusses the 10-year treasury yield of 4% as a benchmark for current market comparisons. He argues that this fixed return is currently more attractive than the 1.3% dividend yield offered by the broad stock market. He suggests that for many investors, this represents a better risk-adjusted outlook than the S&P 500 over a ten-year period.

Mentioned Stocks

SPY

Sentiment: HOLD

Reasoning: Sven argues that the S&P 500 is at all-time highs with a dividend yield of only 1.3%, far below the historical average of 4%. He believes the risk-reward ratio is poor and suggests that 10-year treasuries at 4% are likely to outperform the index if valuations normalize or remain stagnant over the next decade.

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TLT

Sentiment: BUY

Reasoning: Sven notes that 10-year treasuries currently offer a 4% yield, which is significantly more attractive than the current S&P 500 dividend yield. He suggests that this represents a superior risk-adjusted return for those looking to protect their capital while the stock market is at peak valuations.

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BRK.B

Sentiment: BUY

Reasoning: Sven views Berkshire Hathaway's record cash position of $380 billion as a sign of strategic wisdom. He highlights that Warren Buffett is waiting for the right opportunity rather than forcing capital into an expensive market, which Sven considers a model for retail investors to follow.

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